Auditing Chapter Two

(TCO 4) To succeed in an action against the attender, the thickening must be able to show that disciple Answer the tender was parodyulent. the auditor was grossly negligent. there was a written induce. there is a close causal connection between the auditors behavior and the damages suffered by the client. teacher Explanation Page 121 Points get 2 of 2 Comments 2. headway (TCO 4) The principal issue to be resolved in cases involving alleged neglectfulness is usually Student Answer the amount of the damages suffered by plaintiff. whether to let down punitive damages on defendant. he level of care exercised by the CPA. whether defendant was involved in fraud. teacher Explanation Page 119 Points accredited 2 of 2 Comments 3. wonder (TCO 4) A third-party beneficiary is one which Student Answer has failed to found legal standing before the court does not have privity of contract and is unknown to the contracting parties. does not have privity of contract, just is known to th e contracting parties and intended to benefit under the contract. may establish legal standing before the court after a contract has been consummated. Instructor Explanation Page 121 Points Received 2 of 2Comments 4. read/write head (TCO 4) The objective of the ordinary audit of financial statements is the expression of an opinion on Student Answer the fairness of the financial statements. the truth of the financial statements. the accuracy of the annual report. the accuracy of the annual report. Instructor Explanation Page 142 Points Received 2 of 2 Comments 5. Question (TCO 4) The responsibility for adopting sound accounting policies and maintaining equal internal control rests with the Student Answer board of directors. company management. financial statement auditor. companys internal audit departmentInstructor Explanation Page 143 Points Received 2 of 2 Comments 6. Question (TCO 3) Which of the interest statements is most correct regarding errors and fraud? Student Ans wer An error is unintentional, whereas fraud is intentional. Frauds occur more often than errors in financial statements. Errors are incessantly fraud and frauds are always errors. Auditors have more responsibility for finding fraud than errors. Instructor Explanation Page 145 Points Received 2 of 2 Comments 7. Question (TCO 3) Which of the side by side(p) is not one of the conditions for fraud set forth in SAS No. 99? Student Answer Attitudes/rationalization.Opportunities. Incentives/pressures. Each of the higher up is a condition for fraud. Instructor Explanation Page 337 Points Received 2 of 2 Comments 8. Question (TCO 3) Fraudulent financial reporting may be accomplished through the manipulation of Student Answer assets. liabilities. revenues. all of the above. Instructor Explanation Page 336 Points Received 2 of 2 Comments 9. Question (TCO 3) Which of the following is a factor that relates to incentives to misappropriate assets? Student Answer Significant accounting est imates involving subjective nouss. Significant personal financial obligations.Managements practice of making also aggressive forecasts. High turnover of accounting, internal audit and information technology staff. Instructor Explanation Page 339 Points Received 2 of 2 Comments 10. Question (TCO 3) Auditors may identify conclusions during fieldwork that change or support a judgment about the initial assessment of fraud risk. Which of the following conditions should alert an auditor about the initial assessment? Student Answer Missing or conflicting evidence. Discrepancies in the accounting records. Unusual relationships between the auditor and management. completely of the above.